Good morning Farmer Family …
US farm markets were mixed though mostly higher, on Thursday.
Corn rallied back to print new highs for the day, but ultimaltely it faded by 0.04%.
Soybean prices were fractionally higher by the close, posting a 0.05% gain.
Soymeal closed 0.06% higher.
Bean oil prices were up by 1.08%.
Wheat prices were mixed, with Chicago 0.55% weaker, while K.C. rose 0.45% as well as Minneapolis, up by 0.45%.
Soybean prices inched higher, while corn ended narrowly mixed in a choppy session, as traders weighed poor crop prospects in Argentina against the expanding harvest of a massive Brazilian soybean crop and fears of rising interest rates.
Corn and wheat markets had underlying some support from questions about whether a safe shipping agreement for Ukraine’s grain exports will be extended, although, Chicago wheat prices, fell on profit-taking after hitting six-week highs this week..
Also, traders failed to find much intriguing supply or demand signals.
With the U.S. planting season approaching, current prices for new-crop December corn and November soybean futures favor corn versus soybeans.
Thus, beans are trying to buy back acres.
The U.S. Department of Agriculture is expected to release unofficial forecasts for 2023 plantings and production of major U.S. crops at its annual two-day Outlook Forum next week.
Meantime, the USDA reported its net weekly wheat sales of 209,800t, up 60pc from the previous week, but down 32pc from the prior four-week average.
Export shipments firmed 25% above the prior four-week average.
Japan, Vietnam, Mexico, Egypt and the Philippines were the top five destinations.
Corn net sales of 1,024,500t were down 12pc from the previous week and 15pc from the prior four-week average.
Export shipments jumped 70% higher week-over-week.
Mexico, Saudi Arabia, Guatemala, El Salvador and Japan were the top five destinations.
Soybeans sales of 512,800t were up 37pc from the previous week, but down 35pc from the prior four-week average
Export shipments were nearly identical to the prior four-week average.
China, Germany, the Netherlands, Spain and Mexico were the top five destinations.
As for the products, FAS data had 295,853 MT of meal sales, with 271k for 22/23 and 25k for 23/24 delivery, and 8.3k MT of soy oil sales.
Separately, private exporters reported to the USDA having sold 128,000 metric tons of soybeans for delivery to unknown destinations during the 2022/2023 marketing year.
In this context, corn basis bids were steady to weak after softening 2 to 3 cents across three Midwestern locations.
Soybean basis bids were largely unchanged across the central U.S., but did ease a penny lower at an Ohio elevator.
Commodity funds were net sellers of CBOT wheat and corn futures contracts, and net buyers of soybean, soyoil and soymeal futures.
On this morning, soybean prices ticked higher but the market is set for its first weekly drop in four, as harvest of an all time-high Brazilian crop kept a lid on prices.
Wheat and corn were little changed with both markets set to end the week in a negative territory.
Notably, the most-active soybean contract on the Chicago Board of Trade added 0.3% to $15.31 a bushel as of 03:14 GMT, wheat was flat at $7.65 a bushel and corn lost quarter of a cent to $6.75-3/4 a bushel.
For week, soybeans are down 0.8%, wheat has lost 2.7% and corn have given up 0.7%.
In energy markets, oil prices settled slightly lower yesterday.
Brent crude futures indeed settled at $85.14 a barrel, losing 24 cents.
U.S. West Texas Intermediate crude (WTI) settled at $78.49 a barrel, shedding 10 cents.
Federal Reserve Bank of Cleveland President Loretta Mester said the central bank could become more aggressive with rate rises if inflation surprises to the upside.
The dollar briefly climbed to a six-week peak against a basket of currencies after the U.S. data, weighing on oil.
The EIA on Wednesday reported U.S. crude oil stockpiles last week rose to their highest level since June 2021 after a larger-than-expected build.
However, the prospect of a Chinese demand recovery has contributed to a bullish sentiment.
On the supply side, meantime, Saudi Energy Minister said the current OPEC+ deal to cut oil production targets by 2 million barrels per day (bpd) would be locked in until the end of the year, adding he remained cautious on Chinese demand.
Also, a plan by the administration of U.S. President Joe Biden to release more oil from the country’s Strategic Petroleum Reserve would also “most likely limit any rallies that develop in coming weeks,” analysts said.
On this morning, oil prices were on track for weekly losses.
Brent crude futures indeed dropped 96 cents, or 1.13%, to $84.18 per barrel by 07:44 GMT, while U.S. West Texas Intermediate (WTI) crude futures shed 97 cents, a 1.24% loss, to $77.52.
Both benchmarks were headed for a weekly decline of more than 2.5%.
Data showed that the U.S. producer price index (PPI) rose 0.7% in January, after declining 0.2% in December.
Meanwhile, jobless claims unexpectedly fell to 194,000, compared to the 200,000 forecast.
Strong U.S. data bolstered concerns over rate hikes and prompted a rise in U.S. Treasury yields, which weighed on oil and other commodity prices.
In ocean freight markets, the Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell to a near three-year low on Thursday on waning demand for capesize and panamax vessel segments.
The overall index, indeed, was down 11 points, or 2%, at 530, its lowest since June 1, 2020.
Notably, the capesize index fell for the third consecutive day, down 42 points, or 13.3%, at 275 — its lowest since early June 2020.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, fell $350 to $2,280.
The panamax index fell 12 points, or about 1.5%, to 818.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, were down $115 at $7,358.
The supramax index rose 20 points, or about 3.1%, to 660.
In equity markets, US stock indexes Thursday posted moderate losses, under pressure after the U.S. Jan PPI report was stronger than expected.
Notably, US Jan final-demand PPI rose +0.7% m/m and +6.0% y/y, stronger than expectations of +0.4% m/m and +5.4% y/y.
Also, Jan PPI ex-food and energy rose +0.5% m/m and +5.4% y/y, stronger than expectations of +0.3% m/m and +4.9% y/y.
The report thus showed persistent inflation pressure.
Stock indexes extended their losses Thursday on hawkish comments from Cleveland Fed President Mester and St. Louis Fed President Bullard, who said they could support a 50 bp rate hike at the March FOMC meeting.
That pushed the 10-year T-note yield up to a 1-1/2 month high of 3.871%.
The yield on the two-year Treasury, which tends to track expectations for Fed action, rose to 4.67% from less than 4.60% before the inflation report’s release and from less than 4.10% earlier this month.
Other U.S. economic reports were mixed for stocks.
On the weak side, Jan housing starts fell -4.5% m/m to a 2-1/2 year low of 1.309 million, weaker than expectations of 1.356 million.
Also, the Feb Philadelphia Fed business outlook survey unexpectedly fell -15.4 to a 2-3/4 year low of -24.3, weaker than expectations of -7.5.
Conversely, initial weekly unemployment claims unexpectedly fell -1,000 to 194,000, showing a stronger labor market than expectations of an increase to 200,000.
In this context, the Dow Jones Industrial Average lost 1.3% to 33,696.85, while the Nasdaq composite dropped 1.8% to 11,855.83.
The S&P 500 ended at 4,090.41.
Negative corporate earnings results also weighed on stock indexes.
A 2.7% fall for Microsoft, 3.3% drop for Nvidia and 4.7% slide for Tesla were some of the heaviest weights on the benchmark index.
On this morning, shares slipped in Asia.
Notably, Tokyo’s Nikkei 225 fell 0.7% to 27,513.13 while the Hang Seng in Hong Kong lost 0.7% to 20,836.08.
The Kospi in South Korea sank 1% to 2,450.20.
The Shanghai Composite index gave up 0.2% to 3,243.24 and Australia’s S&P/ASX 200 shed 0.9% to 7,346.80.
Taiwan’s benchmark lost 0.5%.
Bangkok’s SET index fell 0.2% after the government reported the economy grew at a meager 2.6% annual pace in 2022 and slowed more than expected in the last quarter of the year, to a 1.3% annual expansion, as a rebound in tourism failed to make up for weaker exports.
On a quarterly basis GDP fell 1.5% in October-December.
In currency trading, the dollar rose to 134.76 Japanese yen from 133.99 yen.
The euro slipped to $1.0637 from $1.0673.
Going back to analyzing the other agricultural markets …
From South America, conditions were mostly warm and dry in the eastern half of Brazil’s south-east, north and north-east regions in the past two weeks, while cool and wet weather slowed harvesting of the earlier corn crop and safrinha plantings in central and western areas.
Forecast wet conditions may continue to hamper fieldwork.
In this context, Refinitiv Commodities Research said Brazil sowing delays in the second or safrinha crop in some key growing areas due to wet conditions has cut forecast 2022-23 corn production to 126.5Mt.
However, this is well above Conab’s February estimate of 123.7Mt Conab, and 113.1Mt seen in the previous year.
AgRural reduced their estimate for Brazilian soy production from 152.9 to 150.9 MMT.
AgRural’s new estimate would still be a record-breaking effort, if realized.
In Argentina, the Buenos Aires grains exchange said on Thursday it would have to cut its harvest estimate for the country’s beleaguered 2022/2023 soy crop, citing the combined impact of a recent heat wave and a prolonged drought.
The crop’s current outlook stands at 38 million tonnes, down from the 48 million tonnes expected at the season’s start.
The exchange did not provide a new estimate for the harvest.
Impacted crops include corn, whose total harvest outlook the exchange recently cut to 44.5 million tonnes.
Earlier on Thursday, the exchange said in a report that early frosts in the coming days could further hurt Argentina’s soy and corn crops in the south of the country.
In Europe, despite the easing of the euro against the dollar, grain prices have experienced a decline yesterday on Euronext.
European wheat prices fell to a one-week low, pressured by weakness in Chicago and ongoing competition from Black Sea origins.
Export prices in Poland, though were weakened by recent Euronext falls, continued to be underlayed as more ships are loading wheat for exports in Polish ports, which is supportive.
Notably, a multi-national trading house is loading two ships each with 50,000 tonnes for unknown destinations.
One ship has just sailed with 27,000 tonnes of wheat for Algeria another is sailing with 30,000 tonnes for Morocco.
Thus, Polish 12.5% protein wheat indeed fell 15 zloty this week to 1,375 zloty a tonne.
However it’s mean still 287.8 euros per tonnes for March delivery to ports.
However, large volumes of Russian wheat continue to be offered for sale internationally despite geopolitical risks.
Handysize shipments of Russian 11.5% protein wheat were offered in the low $290s a tonne FOB for March shipment from Black Sea ports.
Ukrainian wheat of 11.5% for second-half February/first-half March shipment through ports in the shipping channel was again offered at $280 a tonne FOB, traders said.
In this context, farm office FranceAgriMer on Wednesday lowered its forecast for French soft wheat exports this season.
The European Commission said it would not be publish figures on European Union grain exports and imports this week due to a persisting technical issue.
Meantime, March wheat on Paris-based Euronext indeed settled 0.9% down at 293.75 euros ($313.90) a tonne, after earlier reaching its lowest since last Thursday at 291.75 euros.
Rapeseed prices, in contrast rose, closing above 550 €/t, helped by the rebound of veg oil prices in Rotterdam and the upward movement of palm oil prices that started yesterday in Malaysia.
On this morning, data from farm office FranceAgriMer showed most French wheat crops remain in good condition and farmers have sown more than half of the expected spring barley area.
Notably, an estimated 93% of French soft wheat crops were in good or excellent condition in the week to Feb. 13, up from 92% the previous week.
However, the score was slightly below the 95% registered a year earlier.
The rating was also down from the 97% estimated in FranceAgriMer’s previous crop report in early December.
For winter barley, 92% of the crop was rated good or excellent, while durum wheat scored 93%.
Farmers had made rapid progress in sowing spring barley.
Some 58% of the expected area had been sown, compared with 26% for the same week last year and an average 16% over the previous five years, FranceAgriMer’s data shows.
From Ukraine, grain traders union UGA said it expected Ukraine’s grain and oilseed crop harvest to fall to 64.8 million tonnes in 2023 from 72.7 million tonnes in 2022.
Exports of wheat could be 14 million tonnes and exports of corn could be 20 million tonnes in the 2023/24 marketing season, the union said.
Meantime, negotiations will start in a week on extending the U.N.-backed initiative that has enabled Ukraine to export grain, a senior Ukrainian official said on Friday.
The Black Sea Grain Initiative created a protected sea transit corridor and was designed to alleviate global food shortages.
Ukrainian grain exports in the 2022/23 season, which runs through to June, have fallen 29% to 29.2 million tonnes as of Feb. 13, due to a smaller harvest and logistical difficulties.
From Russia, SovEcon has revised up its forecast for Russia’s wheat exports in the year to June 30 by 100,000t to 44.2 million tonnes (Mt), well up on 39.1Mt in 2021-22.
SovEcon cited a weak ruble, large domestic stocks, and solid demand.
USDA has their official forecast at 43 MMT for Russian wheat exports.
Russia’s Interfax counted 19.8 MMT of wheat stocks in their January count, compared to 12.4 MMT at the same time last year.
From Australia, CBH Group, a private exporter from Australia, said Western Australian farmers have delivered 22.7 MMT of grain, up from 21.3 MMT last year.
They forecast a record crop from the region and suggest final counts will be revised higher.
According to the BOM’s latest three-month outlook, released yesterday, a 60-80pc chance of below-median rainfall is likely for much of sub-tropical Western Australia, most of South Australia, south-west Queensland, the New South Wales slopes, central and western Victoria, and north-west Tasmania.
The longer-range outlook for April-June is looking even drier, with the entire winter-cropping region looking at a high chance of below-median rainfall.
Meantime, local markets tracked sideways yesterday as values remained largely unchanged over the day through most of the commodity markets.
Bids and offers remain wide and liquidity has slowed up.
Northern feed markets still remain firm, despite the sorghum harvest gathering pace, with Downs barley holding ground above $400/t and SFW1 at the $395/t mark.
On the international trade scene, Japan’s MAFF reportedly purchased 76,203t of milling wheat, including 22,178t of US DNS with minimum 14pc protein, 31,000t of CWRS of minimum 13.5pc protein and 23,025t of Australian Standard White for March-April loading.
The International Grains Council (IGC) on Thursday cut its forecast for 2022/23 global corn production by eight million tonnes to 1.153 billion tonnes.
The cut was mainly driven by downward revisions for the United States and Argentina, the IGC said in a monthly update.
However, the corn ending stock is revised upward by + 1 Mt, integrating a decrease in consumption.
Also for wheat, a slight increase in world ending stocks is announced compared to the January publication (+ 1Mt i.e. +2.5% compared to the previous season).
Meanwhile, the inter-governmental body maintained its 2022/23 world wheat crop outlook at 796 million tonnes.
That’s all, thank you.
We wish you a nice day.
Author: Sandro F. Puglisi
